New EPA Positions Reflected in Sweeping Rollback of Greenhouse Gas Regulation

Background

EPA took a historic step in furthering its deregulatory agenda: EPA published a proposal to revoke the 2009 Endangerment Finding for GHGs. EPA now asserts that section 202(a) of the CAA was never intended to reach global climate concerns; that intervening Supreme Court precedent limits reliance on implied authority; and that post-2009 scientific developments undercut the original determination that six "well-mixed" GHGs endanger public health and welfare. If finalized, the proposal would eliminate all federal GHG standards for light-, medium-, and heavy-duty vehicles; terminate the regulatory architecture that has guided the automotive industry for more than a decade; and remove the legal linchpin on which subsequent GHG regulations under the CAA for other industries were built.

The Effect of the Proposed Rule

Section 202(a) of the CAA provides that EPA must regulate classes of new motor vehicles that, in EPA's judgment, cause or contribute to air pollution that may reasonably be anticipated to endanger public health and welfare. The 2009 Endangerment Finding determined that six GHGs endanger the public health and welfare, giving EPA the ability to regulate them for motor vehicles. 

The 2009 Endangerment Finding also became the underlying authority to regulate GHGs more broadly under the CAA. Through subsequent decisions and agency rulemaking, EPA deemed the 2009 Endangerment Finding sufficient to regulate GHGs in other industries, such as stationary sources and jet engines. The effect of the proposed rule extends far beyond the regulation of motor vehicles by removing the justification for other GHG regulations under the CAA. EPA has initiated or plans to initiate separate rulemakings to address these other GHG regulations. 

The proposal will directly affect companies involved in the applicable vehicle and engine categories because the companies will no longer need to comply with the regulations. The proposal could result in substantial cost savings, especially for companies focused on traditional vehicle technologies. However, EPA is not currently modifying any criteria pollutant or air toxic standards, Corporate Average Fuel Economy testing, or associated fuel economy labeling requirements. As a result, the standards will remain the same for criteria pollutants and air toxics under the CAA, gas mileage on passenger cars and lights trucks, and environmental labels on vehicles for sale.

In addition to reducing regulatory burdens, the removal of federal GHG standards more broadly may create uncertainty for companies that are navigating differing state (and for multinational companies, global) laws, varying market dynamics, and previously planned investments in renewable energy technologies and infrastructure.

The Reason for Rescission 

EPA presents a new interpretation of section 202 to justify the rescission of the Endangerment Finding. It states that section 202(a) targets pollutants threatening health or welfare through local or regional exposure, not global atmospheric phenomena. EPA relies on historical uses of section 202(a), which, prior to 2009, was only used to regulate air pollutants that threatened public welfare through local or regional exposure. 

Separately, EPA states that regulating GHGs to address climate change runs afoul of the major questions doctrine, as interpreted by the Supreme Court in West Virginia v. EPA, because Congress did not give EPA clear authorization to address this question. EPA references the One Big Beautiful Bill Act as evidence that Congress intended to reserve the question of climate change action for itself. 

In the alternative, EPA argues that post-2009 scientific developments have eroded scientific support for the Endangerment Finding. EPA references scientific discoveries, including GHG concentrations tracking more optimistic models, uncertainty regarding the health impacts of temperature increases, and uncertainty in the connection between increased global temperatures and extreme weather. 

Potential Challenges to the Rule

If finalized, this rule will almost certainly be challenged. EPA's reasoning for proposing a new interpretation of the statute may end up being one basis for challenging the rule. EPA states that the landmark decision in Loper Bright requires the best reading of the authoritative statute, which is to be determined by judges, not agencies. After Loper Bright, EPA will not receive deference for its CAA interpretation, and challengers to the rule will likely argue that EPA's regional limitation of an air pollutant is not supported by the text. 

The rule will likely also be challenged on scientific grounds. Because Loper Bright only applies to statutory interpretation, EPA's scientific findings are likely to receive some deference. Opponents may still argue that the rescission is arbitrary under the Administrative Procedure Act because EPA failed to provide a "reasoned explanation" for departing from settled precedent, understated benefits of regulating GHGs, and overstated scientific uncertainty.